TARP repayment: An IM exchange

John Carney: I’m convinced that Geithner is violating the law by imposing conditions.

Felix Salmon: Should TARP repayment conditionality be written down in legislation, or should it basically be left up to Treasury on an ad hoc basis?
I think the law is largely irrelevant

John Carney: Which is kind of troubling. I mean, if Congress specifically includes a provision, can the Treasury just ignore it? Has the democracy bubble popped?

Felix Salmon: The law gets written in a hurried way by people who don’t really know what they’re doing, and then the facts on the ground change
I know you can say that about most laws of course
But in this case things are just moving too fast, and it’s the job of the Treasury secretary to stay on top of them

John Carney: Yeah. I think a truly interesting question is how this wound up in the stimulus bill.

Felix Salmon: It is a bit weird that a pro-bank clause ended up in the bill when Congress was mainly trying to punish Wall Street as much as possible

John Carney: especially since it specifically nullifies a clause in the original TARP agreements

Felix Salmon: My guess is that rather than pick a fight with Congress, Treasury let it slide, safe in the knowledge that no bank would try to repay TARP funds in the face of Treasury opposition, no matter what the law says